PrizRed™

PrizRed™ and the 7 primary recurring AI-driven Integration risk categories (Failure Modes) were established from empirical studies to enable proactive assessment of acquiring firms’ post-merger integration readiness by scoring the Integration Risk Tolerance in each of the recurring 7 failure modes during pre-merger executive decision-making process. 

PrizRed™ enables identifying the root causes and effects for each of the 7 failure modes.                                                                                                                                      

7 Failure Modes (AI-driven Integration risk categories): 

1. Cultural and Strategic Misalignment 
2. Technological Integration Issues 
3. Financial Constraints 
4. Cybersecurity Risks 
5. Lack of Early Prioritizations of Integration Issues  
6. Sub-optimal Due Diligence Speed 
7. Cognitive Bias                                                                                                                          

The failure modes that were assigned the highest scores for severity, occurrence, and detection alerts the most integration readiness red flags and should be ranked as highest priority. PrizRed™ PMI RPN scoring rubric is used to assess each Failure Mode and Effects Analysis (FMEA) attributes, severity (S), occurrence (O) and detection (D) by assigning a score from the range of 1 - 4.  

Severity (S): Magnitude of impact if the failure mode occurs. 

1. (Minor): Routine internal remediation with no customer or regulatory impact.
2. (Material): Executive escalation; understanding of quality of service (QoS) impact; limited external exposure. 
3. (Major): External disclosure of control weaknesses or risk control failures. 
4. (Going concern): Regulatory sanctions, stringent financing terms, default  under financing agreements, sustained revenue and profitability erosion, and reputational damage. 

Occurrence (O): Likelihood of the failure mode occurs. 

1. (Rare): Risk controls are robust and independently verified with stress tests showing low or immaterial exposures.
2. (Possible): Lack of executive management oversight with risk controls not fully implemented or mixed with moderate exposures including reliance on workarounds and ad-hoc solutions.
3. (Likely): Near misses are documented and monitoring depicts elevated exposures due to convergent risk factors but critical remediations are still not implemented.
4. (Almost certain): Risk controls are demonstrably insufficient with auditors and regulators flagging material weaknesses including repeated antecedent events. 

Detection (D): Pre-impact diagnostic visibility. 

1. (High): Comprehensive end-to-end observability with regularly tested playbook detectability results yielding low false negatives.
2. (Moderate): Partial coverage of known risk control gaps but playbooks are incomplete or infrequently tested.
3. (Low): Fragmented or lack of end-to-end tracing with discovery frequently originating from effects rather than through indicators.
4. (Very Low): Lack of effective early-warning signals even with acknowledged blind spots across as incidents are frequently discovered post-impact.

The PrizRed™ assessment enable executives during the pre-merger phase of AI-driven M&A decision-making process to appreciate the decision risks associated with choosing to proceed further, and offers a tailored prioritized proactive strategy to mitigate the integration risks.